Steven D. Hamilton

Caution With S Corporation Losses

The Tax Code allows you to deduct losses to the extent you have money invested in the S. If you try to deduct beyond that threshhold and it isn't your personal money, expect problems with the IRS.

01/26/2017
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Personal Taxes
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Article

Walk The Walk, Talk The Talk

If you spend 11 years leading a not-for-profit that does nothing, you can expect your 501(c)(3) status to be revoked by the IRS.

01/20/2017
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Philanthropy
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Article

A Tax Shelter In The Making

The ins and outs of "captive" insurance companies - and making sure that you don't use your captive for other than its intended purpose or the IRS will come calling.

01/12/2017
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Business Taxes
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Article

An Extreme Way To Deduct Expenses Twice

A tax is a tax, but to a great extent, the estate tax and income tax stay out of each other’s way. However, there are some exceptions when there are unexpected outcomes when these two taxes intersect.

01/03/2017
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Personal Taxes
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Article

HRAs Are Back

In 2017, Health Reimbursement Accounts (HRAs) will be available to employers with fewer than 50 full-time-equivalent employees and are tax-free as long as employees also have health insurance.

12/26/2016
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Business Taxes
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Article

Would You Believe?

Can a trust make a charitable donation? It may seem like a simple question, but timing is everything, and if trustees don't follow the details of the trust agreement, the charitable deducation can be lost.

12/20/2016
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Personal Taxes
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Article

Business League: A Different Type Of Tax-Exempt

A business league is a 501(c)(6). Payments to a 501(c)(6) are not deductible as contributions. They are, however, deductible as a business expense- which makes sense as they are business leagues.

12/16/2016
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Business Taxes
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Article

How To Lose All Of Your Auto Deduction

A consultant tried to deduct his Aston Martin Vantage with a simple sheet of paper with two mileage values - one at the beginning of the year and the other at year's end. The IRS was not amused.

12/07/2016
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Business Taxes
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Article

Someone Fought Back Against Ohio – And Won

The underlying question in this case is "does the sale of stock in a business operating in a state where you aren't a resident obligate you to capital gains state taxes on that sale?"

12/01/2016
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Personal Taxes
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Article

Can A Coffee Shop Be Tax-Exempt?

Giving away money will not transform a for-profit activity into a not-for-profit activity. Granted, you may get a charitable deduction, but you will be taxable.

11/25/2016
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Philanthropy
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Article

A Mom Taking Care Of A Disabled Child And Payroll Taxes

How the long hand of the IRS almost made a mom, uninvolved in a failing restaurant, personally responsible for payroll taxes in arrears - and how she barely escaped by the skin of her teeth.

11/19/2016
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Business Taxes
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Article

You Got Repossessed And The Bank Says You Have HOW MUCH Income?

The tax Code considers forgiveness of debt to be taxable income, as your “wealth” has increased - supposedly by an amount equal to the debt forgiven.

11/12/2016
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Personal Taxes
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Article

Deducting Everything - The Tanzi Doctrine

There is a long-standing doctrine that an employee is "in the business" of being an employee, but one still has to show some nexus between business expenses and being an employee in order to deduct them for taxes.

08/19/2016
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Personal Taxes
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Article

The IRS Could Not Collect When the Tax Statute of Limitations Period Expired

There are things that can extend (the technical term is “toll”) the collections period for IRS debt. Make an offer in compromise, for example, and the period gets tolled.

04/15/2016
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Personal Taxes
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Article

How To Lose A Tax Deduction For Wages Paid

The tax law becomes skeptical about wages when related parties are involved, and you cannot get much more related than a mother and her children.

04/07/2016
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Personal Taxes
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Article

Pay Payroll Taxes Or Go Out Of Business?

You get a job helping to turnaround a failing company. You discover payroll taxes haven't been paid and struggle to catch up with dwindling cash flow. Expect the IRS to hold you personally financially responsible, regardless.

02/28/2016
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Business Taxes
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Article

Tax Mulligans and Tennessee Walking Horses

The IRS reserves the right to challenge how you structure a transaction, but – once decided – you yourself are bound by your decision.

02/20/2016
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Personal Taxes
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Article

Romancing The Income

A romance starts with a legal agreement between our lovers and a $400,000 payment - nothing says love like a check you can immediately take to the bank. It devolves into the ex-girlfriend with an unexpected IRS tax...

02/11/2016
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Personal Taxes
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Article

Getting A Tax Deduction From A Golf Course

In this tax case, the golf course owner won, sustaining a large deduction for a conservation easement, and the Administration was not happy.

02/04/2016
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Personal Taxes
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Article

A Baseball Player Gets Hit By A Penalty

Mo Vaughn, the American League MVP in 1995, not only was robbed of millions by his financial advisor, but also was left in the lurch when his tax returns weren't filed. And then the IRS came calling.

01/29/2016
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Personal Taxes
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Article

Nails, REITs And Coffins

It began as some pushed the envelope. They redefined “real estate” to include things that are not real estate. As a result, Congress put a chill on future REIT deals with the “Protecting Americans from Tax Hikes Act...

01/21/2016
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Business Taxes
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Article

Does The IRS Want 1099s For Your Charitable Contributions?

The IRS recently announced that it was withdrawing proposed regulations that would have had charities collecting your social security number with your contributions - a concept that was on its way to becoming another government-facilitated opportunity for identity...

01/13/2016
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Philanthropy
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Article

Vanguard's Whistleblower Tax Case

Can the IRS go after you for not making enough profit? Vanguard's unique structure where its management company is owned by the funds themselves yields low internal costs, but may have created some IRS tax issues.

01/06/2016
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Business Taxes
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Article

Talking Expatriation (And A Little Latin)

Remaining a U.S. citizen while living outside the United States is complicated. Having an overseas bank account local to your foreign residence is subject to the same regime the IRS uses for those suspected of stashing money overseas.

12/29/2015
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Personal Taxes
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Article

Can The IRS Use A Private Debt Collector Against You?

The highway bill signed on December 4th requires that the IRS use private debt collectors for certain tax debts in arrears. Meanwhile, the Federal Trade Commission routinely reports more complaints about debt collectors than any other industry.

12/21/2015
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Personal Taxes
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Article

When A Good Cause Is Not Enough

A 501(c)(3) has to be publicly-supported. And there are more specialized issues. A nonprofit cannot conduct an ongoing business and avoid tax because of its exemption.

12/11/2015
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Philanthropy
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Article

What If You Put Too Much In An IRA?

There is no income “test” for an IRA contribution if one (or one’s spouse) does not have another available retirement plan. Have a plan at work, however, and the rule changes.

12/03/2015
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Personal Taxes
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Article

Helping Out A Family Member’s Business

Let’s say that you have a profitable business. You have a family member who has an unprofitable business. You want to help out the family member. How do you maximize your chance of a tax deduction?

11/25/2015
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Personal Taxes
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Article

The Income Awakens

Someone sells a principal residence – a house with its $500,000 tax exclusion. They sell the house on a land contract, collect for a few years, and then the buyer defaults. Calculating taxable income can be complex.

11/19/2015
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Personal Taxes
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Article

Losing An Alimony Tax Deduction

There are four key statutory requirements before any payment can be deductible as alimony. It is amazing how often someone will fail one of them.

11/13/2015
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Personal Taxes
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Article

So What If You Do Not File A Gift Tax Return?

What you should know if you are very successful and will be subject to the federal estate tax.

11/05/2015
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Estate Planning
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Article

Using An Annuity To Teach Tax

An odd result where you can owe tax and a penalty on more money than you make from a deal. While this makes sense to a tax guy, it can be a bit hard to teach.

10/28/2015
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Personal Taxes
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Article

Does A Charitable Remainder Trust Have To Be Charitable?

Charitable remainder trusts are great tax vehicles, but if it takes a high-powered attorney to parse the tax Code to the Tax Court, the deal may not be for you.

10/20/2015
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Estate Planning
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Article

Using a 401(k) to Supercharge a Roth

A tax trick that may be available to you if you participate in a 401(k). The reason for the “may” is that – while the tax Code permits it – your individual plan may not. You have to...

10/12/2015
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Personal Taxes
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Article

Ohio Residency: Bright-Line and Common-Law Tests

Ohio is not one of those states that will chase you down to the ends of the earth to tax you years after you have left. But that doesn’t mean there aren’t rules to follow. A case of...

10/06/2015
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Personal Taxes
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Article

Will Yahoo take Alibaba For A Spin?

Yahoo has proposed spinning its 15% holding of Alibaba shares into a separate publicly traded company. This has caught the IRS's eye.

09/30/2015
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Business Taxes
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Article

Do You Earn Too Much For An IRA?

I wondered whether there is some way to write about this without our eyes glazing over. IRAs are a thicket of seemingly arbitrary rules.

09/24/2015
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Personal Taxes
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Article

How Dennis Rodman Contributed to U.S. Tax Literature

How a U.S. Tax Court decision related to a Dennis Rodman legal settlement changed how personal injury attorneys draft documents.

09/17/2015
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Personal Taxes
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Article

Taxing A Corvette

What if you are on the cash method of accounting and somebody pays you with property instead of cash? You have income. It makes sense when you remember that cash is a form of property.

09/11/2015
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Personal Taxes
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Article

Getting A Carr Out Of New York

The case study of Patrick Carr shows how far New York will go in attempting to subject a former resident's income to New York income tax. A cautionary tale for anyone who changes their state of residency.

09/03/2015
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Personal Taxes
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Article

The IRS and the Statute of Limitations

Did you know that when dealing with the IRS, there are two statutes of limitations? A 3-year statute on assessment and a 10-year statute on collections.

08/27/2015
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Personal Taxes
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Article

Difference Between An Advance And A Loan

Just because someone gives you money does not mean that there exists a loan. A loan implies that both sides anticipate the monies will be repaid.

08/21/2015
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Personal Taxes
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Article

P&G, Coty And A Unicorn Named Morris

A tax planning look at Procter and Gamble's sale of non-core lines to Coty, Inc. that uses a "reverse Morris" structure: a combination of a carve-out of unwanted assets with a prearranged merger.

08/14/2015
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Business Taxes
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Article

Michael Jordan, The Grizzlies And The Jock Tax

How do you allocate an athlete’s income to a given city or state? That is the essence of the jock tax and what makes it different from you or me working away from home for a week or...

07/30/2015
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Personal Taxes
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Article

The Sale of "American Pie"

Did you see where Don McLean sold his original manuscript for “American Pie” at Christie’s? So what are the tax consequences from the sale of his manuscript?

07/23/2015
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Personal Taxes
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Article

Magic Dragon, Pain Management and Taxation

Over twenty states permit the medical use of marijuana, and four permit its recreational use. However, the U.S. Tax Code Section 280E currently prohibits business deductions and credits related to marijuana sales, regardless of state regulations.

07/16/2015
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Business Taxes
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Article

Diabetes, Disability And A Penalty

Is disability income from a disability policy purchased from an insurance company taxable or nontaxable? Why you should pay for disability insurance with after-tax dollars.

07/10/2015
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Personal Taxes
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Article

A Condo Association, Dogs Running Wild and An Office In Home

Many of us have a home office, but few of us can actually claim a tax deduction for it. A review of the main rules for the office-in-home deduction.

07/03/2015
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Personal Taxes
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Article

Deducting Something, On Some Lake, Somewhere

Use a vacation home only as a primary residence or only as a rental, and tax deductions are fairly easy to determine. However if the use varies in between these two extremes, then vacation home rules come into...

06/26/2015
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Personal Taxes
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Article

Is It A Second Home Or A Rental?

There comes a point – if one does not rent – that it may no longer be a rental. Conversely, a key question to also consider is when does a property first start to be considered a rental...

06/12/2015
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Personal Taxes
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Article

My Hypothetical Family Foundation

The terms “private foundation” and “family foundation” are often interchanged. If it is private enough, the only donors to the foundation are one family.

06/05/2015
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Personal Taxes
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Article

Doctor Contests Whether He Had Cancellation Of Debt Income

Loan debt is taxable in the year(s) it is forgiven. Make the mistake of not keeping up, and the IRS will find you. Represent yourself in tax court without professional advice - in this case, disaster.

05/27/2015
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Personal Taxes
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Article

Corporations Unable To File Tax Court Petitions

Among the most recent lines of attack for states wanting to tax you is something called “economic nexus,” meaning that - if you target the state’s citizenry as an economic market – the state figures it has enough...

05/21/2015
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Business Taxes
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Article

Why Does The IRS Want To Tax Donations Raised For A Cancer Patient?

In March of this year the IRS dropped in. They sent a notice that the monies raised through GoFundMe should have been reported as taxable income, and to please remit over $19 thousand in taxes, penalties and interest.

05/13/2015
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Personal Taxes
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Article

The NFL Is Giving Up Its (c)(6) Tax Status

I believe is the real reason for the NFL’s decision to relinquish its (c)(6): the NFL is tired of explaining itself. The NFL is an easy target, and the issue brings bad press when the NFL is trying...

05/05/2015
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Business Taxes
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Article

Less-Than-10% Shareholders Responsible For Corporate Income Tax

If you are a minority shareholder and even if you aren't aware of major constructive fraud being perpetrated by the majority owners of your company, the IRS can still hold you personally responsible.

04/27/2015
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Business Taxes
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Article

Pilgrim's Pride, A Senator And Tax Complexity

There are complex business transactions taking place all the time, with any number of moving parts. Sometimes those parts raise tax issues, and many times those issues are unresolved. .fo

04/21/2015
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Business Taxes
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Article

The IRS Did Not Like This Bonus

Let’s say that you own 100% of a 'C' Corporation. Let’s say your company is quite profitable, and that you take out massive bonuses at year-end. What happens if the IRS thinks your bonus is unreasonable?

04/09/2015
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Business Taxes
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Article

Is There A Tax Difference Between A Company And An Activity?

The key question becomes, can two interrelated companies be combined, so that by showing material participation in one, you also show material participation in the other?

03/31/2015
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Business Taxes
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Article

How An Estate Can Lose A Charitable Deduction

What if the estate intends to write a check to charity but it cannot just yet? Can it still get a deduction? Yep. The rule is known as the “set aside.”

03/22/2015
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Estate Planning
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Article

Is There a Danger From A Nondirect IRA Rollover?

If you take control of your IRA transfer check, the IRS only allows you 60 days to get it into your new account. If you flub it, taxes (and perhaps penalties) are due.

03/15/2015
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Personal Taxes
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Article

Why Does The IRS Want A Disabled Veteran To Work Faster?

The point of the passive activity rules is to disallow the use of passive losses against nonpassive income for taxes. Real estate professionals have more flexibility in deducting their losses than those in other professions.

03/07/2015
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Personal Taxes
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Article

What Does It Take To Exclude Foreign Income?

You have to meet one of two tests to claim the exclusion - either be outside the U.S. for at least 330 days, or be a "bona fide" resident of a foreign country.

02/28/2015
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Personal Taxes
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Article

An Interim Report On Tax Season

Are tax seasons getting "harder"? There are issues for tax practitioners that did not exist a few years ago – or even last year.

02/21/2015
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Personal Taxes
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Article

Distinguishing Capital Gains From Ordinary Income

If you sell a piece of raw land, it is almost incontrovertibly a capital gain. However, once you are a developer and make your living selling land, the answer changes, as land become inventory for you.

02/14/2015
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Personal Taxes
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Article

Why Audit Veterans Organizations?

The aging demographics of veterans is putting a strain on the Code section 501(c)(19) exemption to the unrelated business income tax. Is it just normal audting practices or is the IRS a protagonist?

02/06/2015
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Business Taxes
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Article

The 2014 Tax Act and Professional Employer Organizations (PEOs)

Buried in a bill enacted last year are provisions impacting PEOs, firms that handle outsourced HR functions, including payroll services. The IRS will now allow those firms to be solely responsible for their employer-client’s payroll taxes.

01/30/2015
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Business Taxes
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Article

Why Does Arkansas Think You Would Pay Taxes Voluntarily?

The experience of Outdoor Cap Compay in Benton County, Arkansas shows why ad valorem property taxes may not be recoverable if you make the mistake of paying them when it is not required to do so.

01/23/2015
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Business Taxes
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Article

Does an LLC Member Pay Self-Employment Tax?

Since 1977, an IRS proposed Regulation on limited partners has been on a hold, initially instigated by Congress and subsequently by the IRS's reticence to revisit it. This issue has recently compounded with the new ObamaCare Medicare tax.

01/16/2015
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Personal Taxes
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Article

Ohio Reforms Its Local Income Taxation

Each individual city in Ohio has had local autonomy to uniquely determine its own taxable base and tax regulations. The result? A complicated preparation nightmare for tax pros and filers alike.

01/15/2015
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Personal Taxes
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Article

If I Had A Pony, I Would Ride It On My (Tug) Boat

The question is often, “is this a repair (hence deductible) or a capital improvement (not immediately deductible over time)?” The answer is frequently not immediately clear and requires a deep dive into IRS regulations to sort through.

01/02/2015
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Business Taxes
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Article

Spotting A (Tax) Dependent

There are several tax “breaks” that require you to have a dependent. So what is required to claim someone as a tax dependent?

12/19/2014
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Personal Taxes
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Article

What ObamaCare Tax Forms Should You Expect For Your 2014 Return?

The 2015 Obamacare tax forms are still in draft. But we know enough now to go over the principal tax forms and how they fit into the overall puzzle.

12/16/2014
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Personal Taxes
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Article

The New Israeli Trust Tax

Until this year, Israel has not taxed a trust set up by a foreign person, even if there were Israeli beneficiaries. The Israel Tax Authority now says that many trusts previously exempt will henceforth be taxable.

12/15/2014
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Personal Taxes
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Article

Jurate Antioco's Nightmare On IRS Street

A mistake concerning taxes related to a property. IRS sends notice of intent to levy. That lien puts a foreclosure option into play, even though there is considerable equity in the property. The ugly path to salvation.

12/12/2014
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Personal Taxes
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Article

Is Suing Your Tax Advisor Taxable?

A CPA firm advises an aggressive 1031 exchange tax strategy that promises both cash and tax deferment. The strategy is declared a tax shelter. A fight over the taxability of the ensuing legal settlement.

12/05/2014
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Personal Taxes
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Article

Why Giant Eagle Found Itself In Tax Court

The IRS argued that the accrued liability for a rewards program was not fixed, delaying the deduction that the grocery store could take by a year.

11/26/2014
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Business Taxes
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Article

Buffett's Berkshire Hathaway Is Buying Duracell From Procter & Gamble

Warren Buffet will acquire a company rich with cash; Proctor & Gamble will divest its significantly appreciated Duracell Division in the deal. Yet there should be minimal or no tax consequences to either party.

11/19/2014
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Business Taxes
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Article

Employers - Be Careful With Medical Reimbursement Plans

IRS Notice 2013-54 pretty much indicated that the government is not going to allow a mixture of Obamacare individual health policies and employer reimbursement plans.

11/13/2014
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Business Taxes
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Article

Is Income From Investing Tax-Exempt Income Also Tax-Exempt?

Taxpayers argue that any income earned from investments made with a tax-free personal injury award would – in turn – also be tax-free. Given the frivolous nature of the argument, the IRS was restrained in its penalties.

11/08/2014
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Personal Taxes
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Article

Do You HAVE To Cash That Bonus Check (To Get A Tax Deduction)?

There is a legal concept when paying with a check. A check is referred to as a “conditional payment,” because writing the check is subject to a condition subsequent. That subsequent condition is the check clearing the bank.

10/31/2014
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Business Taxes
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Article

Has Maryland Been Caught Reaching Into The Tax Cookie Jar?

Maryland divides its tax between a “state” tax and a “county” tax. It argues that Subchapter S taxpayers can not claim a credit for taxes paid to other states against the county portion of the Maryland tax. Enter...

10/24/2014
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Business Taxes
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Article

What New Paperwork Does An Employer Have Under ObamaCare?

The easiest way to make sense of this is to divide employers into three categories - less than 50 employees, 50 to 99 employees and 100 and over employees. Why? Because each employer category has its own rules.

10/17/2014
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Business Taxes
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Article

Net Operating Losses And Material Participation

How much would a worker have to work before the irs believes they were really working for tax purposes? Can you own and work at a company but have the IRS consider it to be a “passive activity”...

10/09/2014
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Personal Taxes
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Article

Silicon Valley Cafeterias And Tax-Free Meals

IRC Section 119 was passed in 1954 to allow tax free meals on the premises of an employer. Have practitioners taken cafeteria provisions to places that Congress never intended?

10/03/2014
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Business Taxes
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Article

Do You Actually Need To Rent Before Deducting Rental Expenses?

Let’s say that you own a piece of property. You are trying to claim a rental loss from that property on your tax return. What would you say is the most important requisite in order to claim that...

09/27/2014
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Personal Taxes
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Article

Let's Talk Tax Inversions - Part Two

There is the toll-charge on the shareholders of an inverting corporation. If they own more than 50% of the new foreign company, the shareholders will pay tax on their shares AS IF they had sold them rather than...

09/19/2014
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Business Taxes
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Article

Let's Talk Tax Inversions - Part One

Burger King is acquiring Tim Hortons Inc, a Canadian coffee and donut chain. What has attracted attention is the deal is structured as an inversion, which means that the American company (Burger King) will be moving its tax...

09/12/2014
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Business Taxes
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Article

Windstream Holdings Put What Into a REIT?

Windstream Holdings, a telecommunications company – that is, a phone company, made the tax literature recently by getting IRS approval to put some of its assets in a real estate investment trust, abbreviated “REIT”.

09/06/2014
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Business Taxes
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Article

What Happens When Hacking Concerns Conflict With A State Electronic Payment Mandate?

Our protagonist is Jonathan Haar, and he lives in Massachusetts. On April 15, 2011 he had the audacity to file a paper extension and include a $19,517 check for his tax year 2010 state return.

08/29/2014
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Personal Taxes
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Article

Why is Kinder Morgan Buying Its Own Master Limited Partnerships?

Examining why a company would reconsolidate, especially in an environment which has seen passthrough entities as the structure of choice for so many business owners.

08/21/2014
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Business Taxes
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Article

What Does It Take To Claim a Business Bad Debt Deduction?

The case for being meticulous the next time you extend a personal loan to a business. If you expect to deduct a failed loan on your tax return, you better have organized it as a bona fide debt.

08/14/2014
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Personal Taxes
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Article

Pushing Accounting Methods Too Far

Mix and match accounting methods and periods and magical things can happen. Accountants have played this game since the establishment of the tax Code, and the IRS has been pretty good at catching most of the shenanigans.

08/08/2014
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Business Taxes
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Article

Social Security Disability Payments and IRS Penalties

Many tax practitioners will tell you that penalty abatement rests as much on drawing a sympathetic IRS officer as any technical argument the practitioner can offer. I am increasingly a member of that camp.

08/01/2014
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Personal Taxes
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Article

The IRS Updates a Real Estate Professional Tax Rule

Congress changed the tax code to pull the rug out from under the classic tax shelter. However, it was quickly realized that the basic passive activity rules were unfair to people who made their living in real estate.

07/25/2014
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Personal Taxes
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Article

Suboptimal Tax Laws Are Still Valid Tax Laws

Tax Regulations did not include “employer bankruptcy” as a possible reason to discount the amount of income accelerated for FICA tax collected on deferred compensation – or, at least, to allow some of the FICA to be refunded...

07/18/2014
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Personal Taxes
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Article

No Job Is Worth This Penalty

I have no problem processing a payroll. The one thing I will not do however is involve myself with making payroll tax deposits. The IRS's “responsible person” penalty is just too onerous.

07/11/2014
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Business Taxes
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Article

2012 Loophole on Age 70 ½ IRA Charity Contributions

People may have intended to make a direct distribution to charity but did not do so, waiting for clarification on 2012 tax law. The IRA/charity provisions were extended with the most recent tax bill.

01/21/2013
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Philanthropy
|
Article

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Steven D. Hamilton